Shares Get Boost From Cisco, PepsiCo Results
Strong earnings at Cisco Systems and PepsiCo helped the stock market rebound Wednesday, with the Dow Jones industrial average gaining more than 100 points. Reports that Pfizer might sell its consumer products business boosted drug shares.
Stocks of commodity-related companies were mixed after tumbling in profit taking Tuesday. Near-term gold futures eased 90 cents to $550.10 an ounce after diving $19.20 in the previous session.
Wall Street’s major indexes built momentum in the afternoon after getting a boost at the start of trading from Cisco. The computer networker late Tuesday reported earnings and gave a surprisingly optimistic forecast for the current quarter.
The stock surged $1.31, or 7.2%, to $19.40.
Cisco’s report “indicates the health of the technology sector and the direction of corporate spending,” said Nathaniel Paull, a money manager at New Amsterdam Partners in New York.
A bullish call on Dell shares also underpinned the tech sector. Dell jumped $1.83 to $31.52 after the stock was raised to “outperform” from “market perform” by an analyst at investment firm Sanford C. Bernstein.
The tech-heavy Nasdaq composite index rose 22.02 points, or 1%, to 2,266.98.
The Standard & Poor’s 500 index rallied 10.87 points, or 0.9%, to 1,265.65, after hitting a 2006 low on Tuesday.
Winners topped losers by about 3 to 2 on the New York Stock Exchange.
The Dow gained 108.86 points, or 1%, to 10,858.62, helped by Pfizer, which rose $1.43 to $26.37 as investors applauded news it was mulling over a sale or spinoff of its consumer business, which includes the Listerine, Visine and Lubriderm brands.
PepsiCo’s earnings report also was bullish for blue chips. PepsiCo rose 42 cents to $57.28.
Market sentiment further improved as crude oil declined for the second day. Near-term futures settled at $62.55 a barrel, down 54 cents, in New York. The price was the lowest in more than a month.
In the bond market, Treasury yields rose as relief over a relatively successful auction of 10-year notes was quickly replaced by uncertainty over today’s sale of 30-year bonds, the first in more than four years. The yield on the old 10-year note rose to 4.59% from 4.57% on Tuesday.
The $13 billion in new 10-year notes were sold at a yield of 4.54% and drew bids for 2.32 times the amount on offer, just above the 2.30 average of the four 2005 auctions. Indirect bidders, which include foreign central banks, bought 40% of the deal, about on par with recent sales.
In other market highlights:
* Tech stocks moving higher included IBM, up $1.15 to $80.80; Hewlett-Packard, up $1.64 to $32.01; Google, up $1.16 to $369.08; and PMC-Sierra, up 73 cents to $10.78.
But Microsoft slipped 3 cents to $26.91.
* Major drug shares were higher on Pfizer’s news. Johnson & Johnson rallied $1.80 to $58.60, Eli Lilly added 72 cents to $55.70, and Merck was up 60 cents to $34.29.
* Among commodity-related stocks, Phelps Dodge gained $2.37 to $154.90 and Inco added 49 cents to $48.55. But steelmaker Nucor lost $2.03 to $80.07, and U.S. Steel was off $1.62 to $57.10.
* Energy-related stocks were mixed. Exxon Mobil added 16 cents to $60.39, and Schlumberger rallied $1.72 to $119.22. Todco slumped $1.37 to $42.09.
* In the new-issues market, Crocs surged $7.55, or 36%, to $28.55 on its first day of trading. The company makes vibrantly colored shoes, clogs and boots.
